While countries like the US and the UK continue to ponder over the acceptance of cryptocurrencies in their geographies, the small island nation of Cuba has now declared that it will recognize these modern-day currencies and even regulate them. Cuban Central Bank will formulate the rules of their transactions and even issue licenses for businesses to function as service providers.
Earlier this year, El Salvador became the first country in the world to formally accepting cryptocurrencies such as Bitcoin. Businesses have been open to accepting these alternate modes of payments for a while now, but as cryptocurrencies become more popular among the masses, governments are stepping in to reap the benefits of globally traded currencies. To promote their adoption, the El Salvador government is also ready to deposit Bitcoin in their digital wallets.
On the other end of the spectrum are countries like China who are cracking down on cryptocurrencies in a bid to allegedly launch their own while those like Ukraine and Malaysia are worried about the high energy consumption of their operations. Amidst all this, cryptocurrencies remain attractive as they offer a decentralized yet global mode of payment while also serving as a great instrument for investment. Five years ago, a single Bitcoin was valued at ~$600 US dollars and is currently valued at ~$48,000 USD, with some even estimating that it might hit the $100,000 mark this year.
With piqued public interest have also come cryptocurrency scams as well as attacks on crypto exchanges. Millions of dollars worth of these digital currencies are stolen away overnight with little recourse to recovery for investors. The backing of the government can bring in investigative agencies to track down fraudsters while regulation can help the general public to understand the risks of dealing with new modes of payment.
As the Cuban declaration states, the country plans to use cryptocurrencies for the "socioeconomic interest". Facing heavy sanctions from the US, the country has been starved for funds after inward remittances were blocked by money transferring agencies last year. Cryptocurrencies offered an alternate method for families to receive funds during the pandemic, and it seems likely that the government plans to use this tool to circumvent political pressures.
As more countries begin using alternate modes of payments, the importance of the US dollar will likely drop, reducing the country's influence in the world. A survey by Deloitte suggests that cryptocurrencies could even replace fiat currencies in the next decade, ushering us into a new world of decentralized finance, where financial services are cheaper and also between individuals, rather than through intermediaries like banks.